Russia: companies urged to return from "offshore shadows
Prime Minister Vladimir Putin on Monday decried the illicit use of offshore structures by Russian state businesses to spirit cash out of the country and ordered them to return from the "offshore shadows".Good to see the words. Now let's see the deeds. Nothing would do as much to mark seriousness in the fight against corruption than a crackdown on the use of offshore.
The comments by Putin, who has launched a bid to return to the Kremlin next March, mark his clearest indication to date of concern that accelerating capital flight is being partly driven by corrupt schemes run.
Now here are a couple of interesting statistics:
"Some 55 percent of accumulated foreign direct investment into Russia comes from companies registered in Cyprus or the Netherlands - some $70 billion in total. Most of that is believed to be money of Russian origin."That latter sentence refers to so-called "round tripping." Now Reuters goes on:
The companies counter that they prefer to base themselves offshore because they cannot get adequate redress in the Russian courts and consider the protection of property rights at home to be inadequate.Nonsense. It is one thing to put your money overseas. There are a range of reasons why one might do that, some more legitimate than others. But putting your money overseas doesn't mean you have to put it offshore through a mucky tax haven like Cyprus. Using Cyprus is usually not about investor protection, but about tax abuse or outright crime.
"Returning the Russian economy's strategic sectors from the offshore shadows to the national economy is our priority task for the next period," Putin saidIndeed. Mr. Putin's advisers might like to start, perhaps, by reading this, then this, then this, then this.
Hat tip: David McNair